“Waning global demand and rising input costs threaten China’s growth model, while deflation pressures ease ahead of critical economic releases.”, — write: www.fxempire.com
China’s Exports to the US, Canada, Russia, and South Korea Plunge Chinese exports fell 1.1% year-on-year in October after soaring 8.3% in September. The drop in exports was the first since March 2024, underscoring the effect of US trade policy and a weakening global demand backdrop.
The Kobeissi Letter commented on October’s trade data, stating:
“Shipments to the US plunged -25.1%, marking the 7th consecutive monthly drop. This was partially offset by a 3.1% increase in shipments to the rest of the world. Exports to the EU increased just 1.0%, the slowest pace since February, while shipments to South Korea, Russia, and Canada all fell by double digits. China’s export momentum is fading.”
October’s trade data aligned with the RatingDog China General Manufacturing PMI, which signaled a loss of momentum in the early fourth quarter. The headline PMI dropped from 51.2 in September to 50.6 in October, barely holding above the 50 neutral level. Significantly, new export orders fell at the fastest rate since May. Fading external demand forced producers to cut export charges for the first time in six months, despite rising input prices.
Higher input costs and lower export prices can erode margins, potentially leading to lower wages and job cuts. Crucially, a deteriorating labor market could offset Beijing’s efforts to boost private consumption.
Consumer prices rose 0.2% year-over-year in October after falling 0.3% in September. Meanwhile, producer prices fell 2.1%, following a 2.3% drop in September.
The headline data suggested a pickup in consumer demand, easing deflationary pressures. However, economists were wary of the October data as the National Day and Mid-Autumn Festival may skew demand and prices.
Garcia Herrero commented on the October figures and the ongoing uncertainty about domestic demand, stating:
“It shows there’s at least stabilization in consumer sentiment. We need to check whether this trend continues for November and December data.”
Upcoming Chinese economic data will provide further insights into whether domestic demand can fuel inflationary pressures. These will be key for margins and the labor market.
Amid these mixed economic signals, equity markets remain sensitive to incoming data and policy cues.
Mainland Equities: Momentum Builds Mainland China’s equity markets eased back from their current-year 2025 highs on Tuesday, November 11, as investors await incoming data for fresh clues on whether Beijing can achieve its 5% GDP growth target for the year.
The CSI 300 and the Shanghai Composite Index fell 0.65% and 0.33%, respectively, in early trading. Despite the morning losses, the indices have gained 18.57% and 19.49%, respectively, year-to-date. For context, the Hang Seng Index has soared 32.54% YTD.
Hovering close to their October 2025 highs, upbeat data could boost sentiment, potentially driving new highs. However, policy measures aimed at increasing consumption and supporting the housing market could be key if all-time highs are to be tested. The US–China trade truce also remains an important factor for market sentiment.
China Beige Book commented on developments since the Trump-Xi handshake, stating:
“The problem with handshake agreements is that they’re not worth the paper they’re written on.”
The comments followed reports of Beijing suspending some export restrictions on critical minerals, while retaining others.